P3 Health Partners (NASDAQ:PIII) announced a strong second-quarter performance, reporting $54 million in adjusted EBITDA and officially raising its full-year 2026 outlook. This growth was bolstered by $45 million in favorable payer settlements and prior-year development, signaling a significant turnaround from the same period last year.
Operational Turnaround and Financial Performance
CEO Aric Coffman attributed the positive results to rigorous execution in contract restructuring, network concentration, and medical-cost management. The company reported $80 million in adjusted EBITDA for the first half of 2026, a massive shift compared to the $39 million loss recorded during the first half of 2025.
“The core economic levers that drive the business, our contract structure, our operating model, and our clinical execution are increasingly within our control,” Coffman stated.
Quarterly revenue reached $386 million, up from $356 million year-over-year, despite a reduction in the at-risk membership base. CFO Leif Pedersen noted that per-member funding grew by approximately 15%, driven by rate progression and enhanced documentation of illness burden.
Membership Strategy and Claims Management
At-risk membership stood at roughly 105,000 at the end of Q2, down from 116,000 a year prior. Pedersen explained that this decline was a strategic move from 2025 to exit arrangements that failed to meet the company’s economic thresholds. Including management-services agreements, P3 currently oversees approximately 133,000 lives.
Medical claims expenses totaled $269 million for the quarter. Crucially, Pedersen clarified that $41 million of the $45 million in favorable settlements was recorded specifically within medical claims expense rather than as revenue.
Excluding these settlements, the underlying adjusted EBITDA for the second quarter was approximately $9 million. For the first half of the year, the underlying adjusted EBITDA was negative $18 million, bolstered by a total of $62 million in settlements and prior-year developments recognized over the six-month period.
Clinical Efficiency and Technology Adoption
Management highlighted that its Medicare Advantage medical-cost trend for the first half of 2026 was 1.8% below the 2025 baseline—a stark contrast to industry peers seeing 5% to 7% increases. Chief Medical Officer Amir Bacchus credited this success to the rapid deployment of point-of-care technology.
These tools are currently active across more than 65,000 lives, with providers addressing nearly 90% of care gaps during visits. Furthermore, P3’s network engaged 87% of patients in Q2, while successfully reaching 99.5% of its highest-risk members.
The company also saw success in utilization management, achieving a 17% year-to-date redirect rate from skilled nursing facilities to more appropriate home-based care settings. Quality performance metrics, including HEDIS and medication adherence, remain ahead of internal targets.
2026 Outlook and Future Expansion
P3 ended the quarter with $21 million in cash and equivalents. With improved expectations for the remainder of the year, the company raised its full-year 2026 adjusted EBITDA guidance to a range of $80 million to $110 million, with a midpoint of $95 million.
Looking ahead, the company plans to navigate the typical seasonal increase in medical expenses during the second half of the year through continued care management and payment-integrity programs.
Regarding its Nebraska expansion, Coffman confirmed that P3 will continue services through 2027 while scaling programs, with a full-risk arrangement not expected until 2028. Additionally, the company does not anticipate that current Medicare Advantage county exits by other plans will significantly impact its membership, promising more clarity on 2027 benefit designs following the third-quarter results.
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